On 9 May 2023, as part of the 2023–24 Budget, the Government announced it will implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from digitalisation of the economy. These changes mark a pivotal step in ensuring that multinational enterprise (MNE) groups pay the right amount of tax in Australia. This measure is now law by the operation of the primary legislation and the subordinate legislation.
The primary legislation:
- Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024
- Taxation (Multinational—Global and Domestic Minimum Tax) Imposition Act 2024
- Treasury Laws Amendment (Multinational—Global and Domestic Minimum Tax) (Consequential) Act 2024
The subordinate legislation:
The GloBE Rules provide for a coordinated system of taxation intended to ensure multinational enterprise groups (MNE groups) are subject to a global minimum tax rate of 15% in each of the jurisdictions where they operate.
With the implementation of this measure, in-scope multinational groups will need to:
- lodge a foreign lodgment notification, AIUTR and DMTR which are combined in one form, the Combined global and domestic minimum tax return (CGDMTR)
- lodge a GloBE Information Return (GIR)
- the GIR will need to be lodged 18 months after the first year end (15 months for subsequent years)
- the OECD have published the GIR, for details, see GloBE Information Return.
To deliver on the intent of the OECD GloBE rules and a domestic minimum tax, of interest to this group, the following key elements have been delivered:
- Update to ATO systems to accept lodgment of the GIR complying with the OECD’s specifiedXML schema.
- New electronic Australian tax return, the CGDMTR, complying with domestic requirements for an approved form to enable assessment and collection of Top-up Tax.
- Lodgment and compliance processes designed to be in pattern with existing systems.
- An international data exchange component that automatically exchanges sections of the GIR in accordance with the dissemination approach, as agreed upon by the OECD Inclusive Framework.
- IT systems to capture and store lodged and exchanged data for reporting and administration purposes.
- New data and analytics capabilities to process and analyse stored information, as well as exchange capabilities where required.
See our website for more information on the implementation of the GloBE rules and domestic minimum tax.
Key dates:
The start dates for the:
- 15% global minimum tax for large multinational enterprises will occur over two years with the
- Income Inclusion Rule to apply to years starting on or after 1 January 2024, and
- Undertaxed Profits Rule to apply to years starting on or after 1 January 2025
- 15% Domestic Minimum Tax to apply to years starting on or after 1 January 2024.
Consultation:
Australia’s adoption of the Implementation of a global minimum tax and a domestic minimum tax - working group
The purpose of this working group is to co-design and discuss technical considerations for implementation of the measure, ensuring alignment with the ATO’s requirements and standards as well as providing a good user experience.
The working group will discuss and review:
- Options for appropriate channel selection to support new obligations (completed).
- Interoperability with other tax jurisdictions, as this is a global requirement (completed).
- Potential risks and challenges in the software development process to implement updates to the GIR and the CGDMTR, and provide opportunities to develop strategies to mitigate them.
- Record keeping requirements for the measure.
- Lodgment obligations for early balancers (Substituted Accounting Periods) (completed).
The ATO consultation framework underpins our consultation framework arrangements.
For a list of current members, see Australia’s adoption of the implementation of global minimum and domestic minimum tax working group members (PDF, 81KB).